The two mods have handled your actual question, but did not actually handle the last part of your question
Every member of the community is a moderator in his/her own right. From day one, everyone has a priviledge to edit posts, although you need at least 2K reputation to edit posts without having other members having to accept your edits first.
Your 'moderator' priviledges comes with reputation earned on the site, the more reputation you earn, the more priviledges you have. Someone like me (25 000+ rep) have earned all 'moderator' priviledges which is available to normal members. What separate us from mods is things like
mods can delete and undelete answers and questions by themselves, we need at least 3 votes from members with enough reputation to do so
mods can close a question by themselves, we need 5 votes from 3K+ members
Only mods can undelete questions and answers which was deleted by a mod, we can only undelete what was deleted by normal members
Only mods can handle flags like spam flags, special mod flags and rude flags, although it seems like if a question or answer recieves enough spam flags, it is automatically deleted without a mod having to step in
mods can approve suggested edits by themselves, we need two members to approve a suggested edit
mods can reopen closed questions by themselves, we need 3 votes (IIRC)
There are other duties that mods fulfil that I'm not sure of, but apart from that, as I said, we are mods in our own rights, but all of this means nothing if we cannot stand together as a community, we as community must moderate the site. It is impossible as a single member to try and moderate with our limited priviledges.
As @Rarst said, mods are janitors and is only there to handle issues that the community can't handle (stuff that is outside the list of priviledges we as normal members have).
Whether or not we have elections to elect new mods, I do think that being elevated to mod is not always the best way to reward someone for their hard work on sites like these. I personally put a lot of effort into this site, but has no intention of becoming a mod. Electing me to mod would not be a reward to me at all, it would just be a pain in the @ss to me.
I do agree that some users like @Gabriel does deserve some kind of reward or appreciation for his ongoing work that he puts into moderating the site, but making him moderator might not be in his best interest. At this stage, the is no reward system (except for the badge system which only works up to 1000 reviews in the six review queues) in place to reward these type of users, and I would really like to see something in the future being implemented to reward such people.
We can't be all moderators, neither does all of us like to be a moderator. Having regular or irregular elections to select new mods is not really a issue here (if you have a issue, you can probably take it up with SE admins), the real issue is to reward some users for the time and effort they put into moderating sites like these without having to promote them to mods.
As final conclusion, I think that if what you are doing on sites like these are just a matter of wanting to become a mod or someone special, then you are doing it all wrong. What you do should give you satisfaction, it must be from your heart and with love, you should never expect anything back in return. If you do this, then you are here for the right reasons